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General Electric HealthCare spinoff date and details in full as GE confirms plans

By Jenal Mehta

13:25, 13 October 2022

GE factory
GE confirms details of its healthcare spin off. Photo - Getty Images

General Electric’s (GE) healthcare spin off is due to take place in January. The American conglomerate has now confirmed the details of this event.

In November 2021, the group announced its plan to split the company into three separate publicly-traded companies, each focused on energy, healthcare and aviation.

The announcement didn't help to lift the stock, however. The GE share price is currently trading 35% lower than it was a year ago after it battled worker and equipment shortages.

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Details

The spinoff will be named GE HealthCare and will retain the current healthcare unit with a new set of board members.

The 10 member board team will include Peter Arduini as chief executive (CEO) of GE Healthcare, along with the GE CEO Larry Culp. There will also be executives from Honeywell (HON) and Amazon (AMZN) Web Services.

“With this initial group of directors, we have a highly qualified and capable board that will enable GE HealthCare to hit the ground running,” said Culp.

On 11 October, GE filed form 10 with the Securities and Exchange Commission (SEC) in which it outlined four business segments – imaging, ultrasound, patient care solutions and pharmaceutical diagnostics.

The company confirmed that GE HealthCare will issue debt securities, in order to pay outstanding obligations over time.

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More details are to come on investor day to be held by GE HealthCare on 8 December.

 

What does it mean for investors?

GE’s stock has lowered significantly since the start of 2022. It faced turbulence after pandemic-induced supply chain constraints. Medical equipment deployments, which mostly came from China, heavily impacted the firm. Competitors such as Siemens Healthineers and Philips faced similar issues.

It is completely unknown what price investors should place on the healthcare spin off. However, based on the valuation of Siemens Healthineers, the market value can be placed at around $15bn. GE will retain 19.9% of the new healthcare spin off.

Growth in demand for medical equipment remains robust. Revenue from the current healthcare unit has increased for two consecutive quarters.

By contrast, its renewable energy and energy power businesses have seen a decline in revenue. The healthcare sector arm is likely to remain a steady stream of revenue for the firm.

Markets in this article

AMZN
Amazon.com Inc (Extended Hours)
194.35 USD
-0.92 -0.470%
GE
General Electric Co (Extended Hours)
159.03 USD
-2.85 -1.760%
HON
Honeywell
215.22 USD
0.2 +0.090%

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